Advanced Micro Devices, Inc. (NYSE: AMD) is having more than a hard time turning around. The PC business is drying up according to many media reports and even Intel Corporation (NASDAQ: INTC) has been way behind the eight-ball when it comes to getting into smartphones and tablets. So what exactly are we supposed to make of a report from Wells Fargo that we picked up from another brokerage firm where Wells Fargo has maintained an Outperform rating with an implied price target of $5 to $7 for the stock.

AMD is in theory a turnaround stock and a value stock depending on which metrics investors are willing to rely upon. AMD also in reality represents a value trap and a turnaround which just won’t turn around.

The report under question is on the heels of the arrival of what is the 32 nanometer Richland as the replacement to the 32 nanometer Trinity processors. After looking into this it seems that this is the third generation of 32 nanometer chips, but the company is also apparently moving to 28 nanometer later this year with strong graphics capabilities inside.

Another supposed boost would have been from AMD selling off its Austin campus for about $164 million in a sale lease-back arrangement. Seeking Alpha also has AMD in a 5 stocks under $5 to buy report and even goes on to mention that QUALCOMM Inc. (NASDAQ: QCOM) might ultimately be a buyer of AMD and that it is relatively cheap even if sales are falling. We have also heard of insider buying and last month’s news about a Sony PlayStation4 game console order win.

So here is where the beef with owning AMD stock arises, or at least comes up yet again. For years AMD was the story that kept Intel Corporation (NASDAQ: INTC) from being a monopoly in the PC business. That might not have changed entirely, but the world is entering the post-PC phase. Tablets and smartphones are the driving force as of today. If there was really this much positive happening at AMD wouldn’t the stock be up more than 0.7% at $2.61? Its 52-week range is $1.81 to $8.35.

What is interesting is that we heard some rumblings in December that certain chips for servers were getting more widespread early positive reception. That hasn’t kept sellers from coming into the fray for three different occasions when shares reached $2.75 or just above. Maybe $2.00 or so represents a good floor for those with many other assets that they are not betting their life on. That being said, we just have a hard time seeing the case for a $5 to $7 valuation even from a respectable Wall Street analyst.

At $2.60, a double price would really be $5.20. Adding $7 to the higher upside is very hard to fathom. AMD has to be extremely conservative on its cash at this point and that prevents it from being too aggressive and that will prevent it from being a major acquirer. AMD has a mere market cap of $1.8 billion, but its cash and liquidity of short-term assets keeps dropping because of operating losses. Now it is running leaner but the Thomson Reuters consensus is calling for losses in 2013 and 2014.

At $2.60, the consensus analyst price target from Thomson Reuters is only $2.81 and the highest price target listed is $5.00 for the stock. We would be more inclined to refer back to a Barclays downgrade at the start of 2013 where AMD was cut to Underweight with a $2.00 price target.

Maybe we have just been too negative for too long about the valuation of AMD. We openly admit that this is an easy trap to fall into. We have been aggressive about calling out management and pointing out the flaws of its efforts for what feels like an eternity. Still, this feels like a situation where short sellers have been able to shoot fish in a barrel for far too long for it to end. If all the new great developments were really so great then we would expect it to be reflected with a higher share price.

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